Journal of Applied Finance & Banking

Measuring the Financial Performance of Islamic Banks

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• Abstract

  The aim of this paper is to measure the financial performance of two Islamic banks in United Arab Emirates for the period of 2003 to 2007. Different groups of ratios have been used to measure the performance and make a comparison between these two banks. The ratios which are used are going to measure liquidity, profitability, management capacity, capital structure and share performance ratios. The research goes further step to measure the financial stability of the two banks. Descriptive statistical analysis was used to rank the performance, measuring the dispersion and the stability of performance. The finding revealed that the both banks did well for the above period. Moreover, the liquidity level is lower in Dubai Islamic bank than its rival, while the profitability level is much higher in Dubai Islamic bank than in Abu Dhabi bank. Dubai Islamic bank, has managedby and large its operation more successfully than Abu Dhabi Islamic bank, but the later bank is not far off with a similar capital structure. The four ratios of share performance indicted that Abu Dhabi Islamic bank is better off than Dubai Islamic bank. Finally, Abu Dhabi bank had a high level of stability than Dubai Islamic bank.